Different types of Car Insurance: The pros and cons of each

With 60% to 70% of vehicles in South Africa uninsured and more than 800,000 accidents occurring annually, most vehicles involved in accidents are not insured. However, with different types of insurance available to consumers, even insurance with low coverage is better than no coverage.

According to the Short-Term Insurance Industry in South Africa 2022 report, vehicles are generally not insured due to affordability, people believing they will never be involved in an accident or believing they only drive short distances or do not drive often, or because vehicle owners do not realise how high vehicle repair costs are.

Driving uninsured can cost a lot more in the long run. If you find that you’re struggling to pay for your insurance premiums, contact your insurance company to let them know. They might help by lowering your premiums. You can also shop around for a cheaper insurance quote.

Knowing the different types of car insurance and their coverage provided is an important part of getting the policy that’s right for you. Below we highlight the pros and cons of each:

Fully Comprehensive car insurance provides the highest level of coverage for you and your car against damage or third-party claims from an auto accident involving your car. It covers you to the maximum degree, even if you're at fault in the accident. Fully comprehensive insurance covers your own damages and damages or financial losses you cause to a third party in the form of a bodily injury or property damage.

A typical fully comprehensive car insurance policy covers:

• Damages caused by your car to someone else’s property
• Damages to your car due to any covered incident like fire, theft, and vandalism
• Accidental damages
• Damage or loss to the assets within your insured car

Although Fully Comprehensive Car Insurance is already the highest level of coverage, you can also include optional extras to meet your specific coverage needs.

Pros

• Covers various perils, unexpected events, and third-party liabilities
• Provides protection against all kinds of auto accidents such as collisions and hit and run accidents
• Covers damages and losses caused by natural disasters such as extreme weather conditions
• Reimburses the drivers for totaled vehicles
• Meets coverage requirements for leasing companies and lenders

Cons

• Fully comprehensive car insurance is more expensive than other types. It is even more expensive if you choose to add some additional riders to your policy
• Not a good option for the owners of old cars

Third-Party fire and theft car insurance covers you if you cause any damage to another person or their property as well as any damage caused by a fire. It also covers you if your car is stolen. This type of insurance doesn't cover the damages to your car due to any other perils except fire and theft.

Pros

• It’s relatively inexpensive compared comprehensive car insurance
• A good option for drivers looking for standard car insurance coverage
• Provides peace of mind to you

Cons

•  It doesn’t cover you if your car gets damaged in any incident other than fire and theft
• Not a good option for newer and high-value cars

As the name implies, third-party liability car insurance protects you only against third-party liabilities where you cause damage to third-party property or a bodily injury to another person. It doesn’t cover you against any damages to your car or if your car is stolen.

Pros

• Third-Party liability car insurance is the cheapest insurance available

Cons

• Third-Party liability car insurance doesn’t cover you against damages to your car due to an accident or any other peril, which means you need to pay the repair or replacement cost out of your pocket if your car gets damaged.

This type of insurance is best if you drive a car that is fully paid off and you have enough funds to replace the vehicle if it is stolen or damaged.